NEW YORK, Feb. 20 /Xinhua-PRNewswire-FirstCall/ -- China Dongsheng
International, Inc. (OTC Bulletin Board: CDSG), a leading developer and
manufacturer of nutritional supplements and personal care products provider
in China, today announced the Company's financial results for the fiscal
year 2008 second quarter ended December 31, 2007.
-- Company's strategic plan realizes initial results of manufacturing its
own branded products in-house.
-- Second quarter gross profit increases 39% to $8.51 Million
-- Gross margin improves to 85% from 58% versus prior comparable period
-- Net income increases 12% to $4.33 Million quarter over quarter as the
net margin improves to 43.2% from 36.8%.
"We continue to execute our strategic plan to vertically integrate operations and focus on our own branded products. We are pleased to be able to increase our net earnings during this transition period while dramatically improving our gross margins," said Mr. Aidong Yu, Chairman of China Dongsheng International, Inc. "Moreover, we expect to see continued significant growth in profits from our branded products in the coming quarters as we continue to roll-out new production lines at our manufacturing facilities. With our extensive distribution, strong demand for our branded products, expanded R&D team, and our GMP certified manufacturing facilities, the Company is becoming increasingly well positioned to capitalize on the growth of the healthcare market in China"
Second Quarter Fiscal Year 2008 Results
Net sales for the fiscal year second quarter ended December 31, 2007 totalled $10.01 million and were relatively unchanged compared to the total of $10.49 million in the same period in 2006. This largely reflects our focus on our higher margin branded products manufactured in-house and discontinuing the distribution of certain lower margin products from third parties.
We sold 676,462 units of our Chitosan based branded products for the three month ended by December 31, 2007 compared to 231,172 units in the previous period of 2006. The sales of our branded products increased 159% to $9,405,036 from $5,612,729 in the previous period in 2006.
The increase in our branded product revenues was offset by our decision to no longer distribute lower margin third party products including ozone purifiers. Accordingly, we discontinued the supply relationship with Harbin Jiujiu Ozone Purifier Co. as we plan to bring the manufacturing in-house. However, as of December 31, 2007, the new product line was not yet completed.
Compared to the corresponding period in 2006, cost of goods sold decreased by $2,904,833, or 66% for the three months ended December 31, 2007. The decrease is due in the lowered raw material purchase expenses. Dongsheng began manufacturing its own branded products and was able to drastically reduce the cost of the raw materials by negotiating more favorable terms with suppliers. This planned shift in production has considerably reduced our cost of goods sold and generated the improved gross margin.
Gross profit margin increased to 85% for the three months ended December 31, 2007, compared to the three months ended December 31, 2006 of 58%. This increase is primarily due to the lower cost of goods sold which results from our in-house manufacturing capabilities as well as the improved revenue mix.
Operating expenses were $2,281,877. Dongsheng accounted for $1,690,347 while Paperclip accounted for $591,530 compared to $403,606 for the quarter ended December 31, 2006.
Operating expenses increased by $1,878,271 for the quarter ended December 31, 2007. This increase in total operating expense is part of Dongsheng's plan to strengthen its management and maintain its core sales force. We have supplemented our sales force with fixed salaries in addition to their commissions in an effort to provide additional incentives to the current and future sales force as we focus on our branded products.
Net income for the fiscal year second quarter ended December 31, 2007 increased 11.8% to $4,326,248 million compared to $3,866,700 million for the same period 2006.
On the balance sheet, total net assets for the fiscal year second quarter of 2008 were $49.4 million.
About China Dongsheng International, Inc.
China Dongsheng International, Inc., through its 100%-owned subsidiary,
Jilin Dongsheng Weiye Science and Technology Development Co., Ltd, is
engaged in the development and manufacture of nutritional supplements and
personal care products domestically in China. The Company sells these
products through approximately 200,000 distributors (with 18,000 full time
salespersons) and 2,500 retail outlets (with over 400 exclusive franchise
stores) in twenty-six provinces throughout China.
CHINA DONGSHENG INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2007
Cash and cash equivalents $817,151
Accounts receivable - net of allowance for
doubtful accounts of $40,000 230,435
Prepaid expenses 275
Advances to suppliers 301,712
Other receivable 8,506
Total Current Assets 1,423,497
Property and equipment, net of
accumulated depreciation of $653,051 43,158,276
Investment advance 7,328,708
Deposit on land 2,878,842
Land use right, net 2,792,952
Total Other Assets 13,000,502
Total Assets $57,582,275
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $730,872
Unearned revenue 770,400
Taxes payable 6,077,033
Accrued expenses and other payables 558,461
Total Current Liabilities 8,136,766
Notes payable - related party 11,210
Total Liabilities 8,147,976
Common stock, $0.001 par value, 100,000,000 shares
authorized; 31,546,134 shares
issued and outstanding at December 31, 2007 31,546
Additional paid in capital 1,259,847
Accumulated other comprehensive income 2,490,430
Retained earnings - Appropriated 1,218,086
Retained earnings - Unappropriated 44,434,390
Total Stockholders' Equity 49,434,299
Total Liabilities and Stockholders' Equity $57,582,275
CHINA DONGSHENG INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE
For the six and three months ended December 31, 2007 and 2006
Six-Month Ended Three-Month Ended
December December December December
31, 2007 31, 2006 31, 2007 31, 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Sales $18,389,721 $18,366,646 $10,005,710 $10,493,470
Cost of Sales 4,448,761 7,640,472 1,497,256 4,402,089
Gross Profit 13,940,960 10,726,174 8,508,454 6,091,381
and administrative 2,818,527 485,248 2,281,877 403,606
income 11,122,433 10,240,926 6,226,577 5,687,775
Other Income and
Interest income 5,795 35 2,539 23
(expense) -- 166,142 1,310 89,416
Total Other Income 5,795 166,177 3,849 89,439
Income Before Income
Taxes 11,128,228 10,407,103 6,230,426 5,777,214
for Income Taxes
benefit (19,392,018) -- -- --
income taxes 3,550,184 3,434,344 1,904,178 1,910,514
income taxes (15,841,834) 3,434,344 1,904,178 1,910,514
Net Income 26,970,062 6,972,759 4,326,248 3,866,700
Safe Harbor Statement
The statements contained herein that are not historical facts are
'forward-looking statements' within the meaning of Section 21E of the
Securities and Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements may be
identified by, among other things, the use of forward-looking terminology
such as 'believes,' 'expects,' 'may,' 'will,' 'should,' or 'anticipates' or
the negative thereof or other variations thereon or comparable terminology,
or by discussions of strategy that involve risks and uncertainties. In
particular, our statements regarding the potential growth of the markets
are examples of such forward-looking statements. The forward-looking
statements include risks and uncertainties, including but not limited to,
general economic conditions and regulatory developments, not within our
control. The factors discussed herein and expressed from time to time in
our filings with the Securities and Exchange Commission could cause actual
results and developments to be materially different from those expressed or
implied by such statements. The forward-looking statements are made only as
of the date of this filing, and we undertake no obligation to publicly
update such forward-looking statements to reflect subsequent events or
For more information, please contact:
Peter D. Zhou
|SOURCE China Dongsheng International, Inc.|
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